Xceed Mortgage Corp. today reported drop in third-quarter profit and said it expects the implementation of an asset-backed commercial paper restructuring plan to boosts future results.

Net income for the quarter ended July 31, was $1.6 million, or 6¢ a share. That compared with $6.5 million, or 22¢ a share in the year earlier period.

The most recent quarter’s profit included a $900,000 writedown for the fair value of financial instruments.

“Our financial results for the 2008 third quarter reflect the initial success of the measures we have taken to adapt our business to the turmoil and change in Canada’s financial services sector since our business was profoundly affected in the 2007 fourth quarter by the collapse of the asset-backed commercial paper (ABCP) market in August 2007,” chairman and CEO Ivan Wahl said in a release.

“As we have previously reported, in view of the changed environment, Xceed revised our business model, entirely shifting away from offering primarily non-traditional mortgage products to only originating business that qualifies for insurance and sale to the Canada Mortgage Bond Program,” Wahl added.

“This has resulted in a significant reduction in our business volumes and an effect on our profit levels as the margins on such mortgages are lower than previously realized for non-traditional offerings.”

The Toronto based mortgage provider, sold $174.1 million worth of mortgages to securitization and other vehicles in the third quarter, of which $149.7 million were insured mortgages. In the prior-year period it sold $286 million worth, none of which were insured.